Healthcare reform to end “job lock” for the over-50 crowd

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When Carmen Oberai was diagnosed with breast cancer several years ago, she knew the treatment would make it tough for her to stay at her job. But she needed the health insurance provided by her employer, so she worked through the illness.

Oberai, 62, works with at-risk pregnant women for a nonprofit agency in Port Charlotte, Florida. “My treatment wasn’t as brutal as they make it sound, but you do get tired as a side-effect, and my work is very demanding,” she says. “I didn’t really know how much time I might need away from work, and I was worried that if I quit I’d lose my insurance and couldn’t get covered anywhere else with my pre-existing condition.”

The health insurance choices for workers like Oberai will change dramatically next year with final implementation of national healthcare reform. The Affordable Care Act (ACA) prohibits insurers from turning away applicants for pre-existing conditions, and that’s expected to turn the key for workers facing “job lock” — people who need to leave their jobs but can’t afford to lose healthcare coverage.

The changes will be especially important for workers over 50, who are too young for Medicare but more likely to have health problems. Nearly half (47 percent) of workers retire earlier than planned, and 55 percent cite a health or disability issue as the cause, according to the Employee Benefit Research Institute.

“I’ve talked with a lot of people who need to leave their jobs because of health problems — but they need the health insurance,” says Kathleen Stoll, director of health policy for Families USA, a nonprofit health care advocacy group. “They’re not sick enough to qualify for disability benefits but they need to cut back on work.”

The end of job lock also will be important for another group of workers — people who have been hanging on to jobs for health insurance but would rather work on their own or start a business.

A recent study by the Urban Institute’s Health Policy Center and Georgetown University’s Health Policy Institute forecast that health reform will boost the number of self-employed people by 1.5 million. And research by the Ewing Marion Kauffman Foundation, which is devoted to entrepreneurship, found that baby boomers have had the highest rate of startups during the last decade.

Older workers who want to jump ship also will benefit from provisions of the ACA designed to control the cost of insurance purchased in new state health insurance exchanges — markets where Americans will be able to shop for a healthcare plan, comparing benefits and prices. Insurers are permitted to set premium rates three times higher for applicants over the age of 50. But for many applicants, out-of-pocket costs will be held down by subsidies and tax credits offered under the new law.

Tax credits are available to families with incomes between 100 percent and 400 percent of the federally-defined poverty guideline. This year that is $11,490 for an individual and $23,550 for a family of four.

The law also offers reduced copayments and deductibles for families up to 250 percent of the poverty level. And some families below 138 percent of the poverty level will qualify for Medicaid — the federal health program for the poor — in states that opted to accept the ACA’s expansion of that program.

How does that compare with existing group coverage offered by employers? Last year, the average worker contribution for an individual policy was $951, according to the Kaiser Family Foundation. For workers buying family coverage, the average contribution was $4,316.

In the exchanges, Kaiser estimates that a household with two 55-year-old adults and 2014 income of $50,000 would pay $4,750 for a “silver” plan, which covers 70 percent of healthcare costs. If that same household had income of $150,000 – too high to qualify for subsidies and credits – Kaiser estimates the annual silver premium would be $13,461.

Three other tiers of coverage also will be offered, with varying levels of premiums and cost-sharing — bronze, gold and platinum.

Exact comparisons between group coverage and policies in the new healthcare exchanges are complicated, since much will depend on the quality of group coverage that workers are leaving behind.

“It really depends on what kind of business they work for,” says Linda Blumberg, co-author of the Urban Institute-Georgetown University study. “Is it a large company or a small business? Are the workers mostly older? All that will have a big influence on what they’re paying now.”

The new health exchanges are to have final insurance prices online in time for open enrollment, which starts Oct. 1. In the meantime, Kaiser has an online subsidy calculator that can provide ballpark estimates of your costs based on your income, age and number of family members needing coverage.

PHOTO: Ernest Sass, 52, (L) winces as he is attended to by Girish Bobby Kapur, M.D. (R) in a room used to see patients who don’t require treatment for trauma inside the emergency room at Ben Taub General Hospital in Houston, Texas July 27, 2009. REUTERS/Jessica Rinaldi

I’m one of the people described in this article. I have a “pre-existing condition”. I have wanted to start my own business for years but could not get health care. I just took the chance a month ago and started my business as COBRA will get me to full Obama care. I pray that the brainwashed minions do not roll back any part of Obama care. If they do my next option is Canada. It would be a shame for the USCA to loose yet another high tech worker and small business.

Absolute garbage.
Ever heard of COBRA? A one page reform that stretched the number of years’ post-employment eligibility would have accomplished everything described in this blatantly biased article.
It didn’t need a 2000 page bill that ‘no-one has read’ and that will cause astronomical increases in health insurance costs to achieve this; (California’s premiums are already up by over 50% year-on-year).
Finally: If ‘Obamacare’ is so wonderful, why has the President suddenly allowed businesses to delay its implementation for a year? Or is it just a coincidence that one year will take us past the 2014 elections?

This is one of the biggest benefits of health care reform as it stands now. Not just over – 50′s, but many others feel obliged to stick with their current job as they cannot get individual insurance due to preexisting conditions. This allows Americans to go for their dreams, and become their best self. A huge benefit.

Author Profile

Mark Miller is a journalist and author who writes about trends in retirement and aging. Mark is the author of The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work and Living (John Wiley & Sons/Bloomberg Press, 2010) and edits RetirementRevised.com. Mark is the former editor of Crain’s Chicago Business, and former Sunday editor of the Chicago Sun-Times.